Howard Lorber, the CEO of Douglas Elliman’s parent company Vector Group, revealed Friday morning that Douglas Elliman has laid off approximately 25 percent of its staff and reduced all other salaries by approximately 15 percent, due to the adverse impact of COVID-19.
Approximately 70 percent of Douglas Elliman’s business is based in New York, according to Lorber, where severe restrictions from the state government have slowed transactions to a crawl at the epicenter of the pandemic.
“The COVID-19 pandemic is having a profound effect on the global economy and financial, and especially in markets and especially in the New York real estate market where approximately 70 percent of Doulas Elliman’s brokerage revenues are derived,” Lorber said. “In response to the pandemic, various governmental agencies in the New York metropolitan area and other markets where Douglas Elliman operates have instituted restrictions on individuals and on the types of businesses that can operate, which impacted Douglas Elliman’s ability to do business.”
“Douglas Elliman began to experience a severe decline in closed sales volume in mid-March, and this continued in April and May,” Lorber added. “We anticipate that this sales volume will continue to be slow until the fall, and possibly longer.”
The company made significant staff and salary reductions in April and is also consolidating some office locations. Douglas Elliman is also currently in discussions with landlords regarding rent reductions or deferrals.
The overall lack of listings hitting the market in New York City has hurt the industry, but that’s a conscious decision, according to Lorber, who expects to see a surge.
“Listings are down a lot because we are not encouraging people to put their places on the market now,” Lorber said. “We don’t think it really makes sense.”
“If they want us to, we’ll do it. But we’re really looking to the time when we can really go back to work. And then I think you’ll see a surge in listings. And generally speaking, the surge of listings will be good for us because there will be a lot of people in the marketplace.”
Overall, in the first quarter of 2020, Douglas Elliman reported a total of $165.6 million in revenue and an adjusted EBIDTA loss of $7.7 million. In the first quarter of 2019, the company reported $161.9 million in revenue and an adjusted EBIDTA loss of $9 million.